Outlaws v. Inmates —Who's Running Your Sales Efforts?

By Andrew J. Birol, President, Birol Growth Consulting, Inc.

You are a smaller company. Maybe you use outside sales reps, or maybe you have your own sales force. But do you have it right?

The question of whether to hire reps or keep a sales staff has become critical for many smaller and mid-sized businesses looking at the growing trend of “Wal-Mart-ization,” which eschews outside sales reps in favor of forcing manufacturers to place captive sales staff on-site at all times. Wal-Mart, of course, gets away with this because of its size and the huge contracts it represents for its vendors. (As other businesses follow suit, independent manufacturer's representatives are becoming increasingly vulnerable; unless reps provide key value, why would companies do business through them?)

But what about your company? Consider how well your current strategy is working. Does one of the following symptoms describe your sales efforts?

Your sales force is more focused on activities and service than on results and sales.

Your independent reps keep asking for more support without delivering better results.

If either statement applies to your business, you are on the wrong track. So, how can you know whether you need outlaws or inmates?

Consider using manufacturers or outside reps when:

A sale to a customer of yours must be made immediately, will be lost if you don't have adequate sales coverage and can best be compensated by commission.

Growing your volume is more important than directly building relationships with your end users.

You want to sell new products to existing customers or existing products to new customers but don’t have the means or time to build your own sales force.

Independent sales reps are hunters; they eat what they kill, track only what's within range and prefer familiar hunting grounds. Because their responsibility is first to their own business, they are unlikely to take the initiative to sell your new products to different buyers or to venture outside their comfort zone if there is not clear payback to them. They also are less likely to provide extra customer training unless either you or your customer are paying for it. There is nothing wrong with this as long as they are increasing the loyalty of their customers. Just remember that their customers may not see themselves as your customers.

Build a captive sales staff when:

Your aim is to sell beyond the purchasing agent and reach deeper into the customer and often into their new product development functions.

You need to open new markets by taking new products to new customers.

You want to saturate a defined geographic territory.

A captive sales force is better at selling products with a longer selling cycle because employees have an incentive to prioritize customer relationships, thereby providing a higher level of service. As an owner, you can encourage your sales staff to nurture customers by compensating them more through salary than commission; this prevents them from constantly glancing over their shoulders to find the next big sale.

As your business grows, the answer may be a judicious combination of reps and sales staff. A sales force tends to be more methodical and manageable and is typically proficient at laying the groundwork to open new markets. Once open, a growing market may be well served by independent sales reps keen on picking the low-hanging fruit. Regardless, if your business is (or should be) based on building customer relationships, a stable sales force is critical. Ensure either your inmates or your outlaws own your customer relationships. Either or both can be fine, but neither is unacceptable.